Chapter 9

Judgment and Decision Making Based

on High Consumer Effort
 Recap

Need Alternative Post-Purchase

Search Choice
Recognition Evaluation Evaluation

When do you
recognize a
need?
 Recap

Need Alternative Post-Purchase

Search Choice
Recognition Evaluation Evaluation

Internal: accessible vs. diagnostic

Confirmation bias (its importance and how to resolve it)
Inhibition.
Mood.
External: acquire info from outside sources.
Pre-purchase search (you search when you recognize a problem)
Ongoing search. (you search even w/o problem. e.g. window
shopping)
 Consumer Decision Making

Need Alternative Post-Purchase

Search Choice
Recognition Evaluation Evaluation
Learning Objectives

1. Why are judgment and decision making

important?
2. Types of cognitive models for high-effort
decision making and influencing
3. Affective decisions in high-effort
situations
4. Identify types of high-effort decisions
made by consumers & how marketers
can influence them
 High-Effort Judgment Processes

Judgments of Likelihood and

Goodness/Badness
Anchoring and Adjustment
Biases in Judgment Processes

Prentice-Hall, cr 2009 9-7

Judgments vs. Decisions

Evaluations; actual
Judgments choice between
alternatives not made.
Judgments do not require
a decision.

Making a selection; based

Decisions in part on judgments
 Types of Judgments

1) Estimation of likelihood: how likely something will

occur.
E.g. you bought a new car.
Will my friends/family like it?
Will this car perform as expected?

2) Judgments of Goodness/badness: Evaluating the

desirability of something.
Is it good to have another SUV in my house?
Is it good/bad to travel to Europe during the winter?
 Anchoring and Adjustment

When making judgments about likelihood and

goodness/badness, consumers often employ an anchoring
and adjustment process.

Anchoring/adjustment process. Starting with an initial

evaluation and adjusting it with additional information.
Biases in Judgment Processes
Confirmation: only focus on judgment that conform to
what you already believe in.

Self-positivityprime
Tend to believe that others are vulnerable (smoking,
seat belts, Weapons, etc)
Nothing bad will happen to us.

Negativity: we give negative information more weight

than positive information.

Mood

Prior brand evaluations

 High-Effort Decisions and High
Effort Decision-Making Processes
(p 224)
Page 225

Types of
Decisions that
Consumers
Face in High-
Effort
Situations
 1) Deciding which brands to consider

1st we decide whether these brands are:

unacceptable (inept set),
indifferent (inert set), or
we want to choose among (consideration set)
 1) Deciding which brands to consider

Evaluation of brands in the consideration set depends on the other

brands(alternatives) in the set.
Iphone vs. Samsung vs. LG, or
Iphone vs. Old Nokia (Kitkat) vs. Blackberry (Less attractive alternatives,
less effort in making a decision)

The attraction effect: occur because inferior brands

increase the attractiveness of the dominant brand
(easier decision)
 1) Deciding which brands to consider

Marketing Implications:

it is critical for a company to get its brand into the

consumers consideration set; otherwise, there is little
chance that the brand will be chosen.
 Page 226

Types of
Decisions that
Consumers
Face in High-
Effort
Situations
2) Deciding what is important to the choice
Before you choose a brand in a consideration set (Mercedes,
Honda, Volvo), you need to determine which criteria are relevant
(Brand image, price, warranty, safety, etc). These depends on
your:

Goals: Brand Image (Mercedes), Safety (Volvo), Price (Honda)

Time: Construal level theory (decide now, specific criteria: do I have

enough money? Or, if later, you may think of more abstract aspects:
will it feel good?)

Framing: how we define the task

Buy a car I can afford? Or buy a car that will impress my friends?
Two different criteria will be employed in these two situations.
Framing serves as initial anchor in decision process.
2) Deciding what is important to the choice

Implications
Make products consistent with consumer goals

Frame and reframe the decision:

free item vs. discount
 Deciding what offerings to choose:
Thought Based Decisions

Cognitive decision-making models:

decisions based on information (Thought-based).

Affective decision-making models:

decisions based on feelings or emotions.
 Deciding what offerings to choose:
Thought Based Decisions
Cognitive decision-making models : decisions based on
information. (more effort)

Compensatory vs. noncompensatory model

Brand (iPhone, Samsung) vs. Attribute model (Price,

Screen size)
 Deciding what offerings to choose:
Thought Based Decisions

Compensatory model (more effort):

mental cost-benefit analysis.
Even though KDD is a Danish product, it tastes good.

Noncompensatory model (less effort):

decision where negative information leads to rejection of the option.
a products weakness cannot be offset (compensated) by strong
attribute.
E.g. you need chocolate milk. Consideration set (KDD, Saudi,
Almarai, KDCOW). KDD is rejected because it is a Danish product,
so it is eliminated from the set.
 Deciding what offerings to choose:
Thought Based Decisions

Brands: evaluate one brand at a time. (iPhone vs. S6)

Product attributes:
compare across brands one attribute at a time
(iPhone vs S6 on price, screen size, etc)
 Deciding what offerings to choose:
Thought Based Decisions

A) compensatory models:

Multiattribute expectancy value model:

Rank Land Cruiser BMW Porsche

Navigation 5 4 (20) 4 (20) 3
Resale value 4 5 (20) 4 (16) 3
Leather Seats 2 2 (4) 5 (10) 3
44 46 33
 Deciding what offerings to choose:
Thought Based Decisions

A) compensatory models:

Multiattribute expectancy value model:

Marketing Implications
Marketers identify which attributes are important to
consumers and that is why their brand is rated poorly.
To turn negative attribute into a positive one.
Address the negative attribute
Capitalize on a positive attribute
 Deciding what offerings to choose:
Thought Based Decisions

A) compensatory models:

additive difference model:

Comparing brands, one attribute at a time.
Similar to soccer/boxing matches.
Rank Land Cruiser BMW Porsche
Navigation 5 4 4 (0) 3
Resale value 4 5 4 (1) 3
Leather Seats 2 2 5 (-3) 3
-2
 Deciding what offerings to choose:
Thought Based Decisions

A) compensatory models:

additive difference model:

helps marketers determine which attributes or outcomes exhibit
the greatest differences among brands and use this knowledge to
improve and properly position their brand
 Deciding what offerings to choose:
Thought Based Decisions

B) Noncompensatory model: Do not allow trade-offs

Conjunctive model: sets minimum cutoffs to reject bad options.

Minimum for all attributes
ALL cars must meet ALL of my criteria to be considered.
Less than KD10,000, Leather seats, Bluetooth, USB port,
remote

Disjunctive model: sets min cutoffs to find good options.

Evaluate on the most important attributes, not in all of them
(vs. conjunctive model)
Ill only consider cars that are:
Less than KD10,000, and
Have leather seats
 Deciding what offerings to choose:
Thought Based Decisions

B) Noncompensatory model cont.

lexicographic model (compare on most important attribute):
select the brand that ranks the best on your most important
attribute.
Ill choose the car that has the best navigation system.

What is the most important thing for you? Navigation

Which brand has the best? Land Cruiser and BMW
What is the 2nd most important thing for me? Resale value
Which one has the best? Land Cruiser

Processing by attribute or brand?

 Deciding what offerings to choose:
Thought Based Decisions

B) Noncompensatory model cont.

elimination-by-aspects model: Similar to the lexicographic model

but adds the notion of acceptable cutoffs.
Show me all cars that have navigation systems.
BMW, Land Cruiser, Sorrento, Porsche (all, not the best)
Now, which one have good resale value? (you define good)
BMW, Land Cruiser, and Porsche
Now, which car has leather seats standard?
BMW

Process continues until a single alternative remains.

Types of Cognitive Choice Models
(Exhibit 9.6)
 Decision Rule

Conjunctive (Brand) Minimum levels for ALL attributes.

non-compensatory

Compare Important attributes (price and

Disjunctive (Brand)
duration) minimum levels. Reject the rest.

Brands compared on ALL attributes

Elimination-by-aspects (Attrib)
Step-by-step.
Pick the brand that ranks highest on your
Lexicographic (Attrib)
most important attribute. (the best in price)
Compensatory

Multiattribute model Sum all attributes, then pick the brand with
(Weighted) (Brand) highest score.

Compare attributes, one at a time. Pick the

Additive difference (Attrib)
one with highest difference.
Marketing Implications
Decision models can also help marketers better plan
marketing communications, especially comparative
ads.

Research shows that consumers with little

commitment to a brand will put more weight on
negative information because they perceive it as
more diagnostic.
 Deciding What Brand to Choose:
Thought-Based Decisions

Decisions based on Compensatory Models

Decisions based on Noncompensatory
Decisions based on Gains and Losses (p
233)

[Read the summary for this Chapter also]

Thought-Based Decisions
Gains and Losses
Consumers decisions also depends on whether the consumer is
motivated to seek gains or to avoid losses.

Prospect Theory: People generally try to avoid risk.

Consumers have stronger reaction to price increases than
price decreases
We hate to lose something (loss aversion)

Endowment effect
Ownership increases value (and loss) associated with an
item. (an iPhone gift)
Sellers typically ask for a higher price (as they are
losing the item) than buyers are willing to pay (as they
will be gaining the item).
Thought-Based Decisions
Gains and Losses
Decrease in Prices.

Increase in the cost of bread?

(stronger reaction to loss of money)
 Thought-Based Decisions
Gains and Losses

Marketing Implications
consumers will be more risk averse and unwilling to buy the
product when the decision involves losses.
full money-back guarantee

consumers will react more negatively to price increases or

higher-priced items than they will react positively to price
decreases.
frame these increases as gains rather than losses (i.e., the
increased benefit the consumer might get from the higher-
priced item)
Deciding What Brand to Choose:
High-Effort
Feeling-Based Decisions (p 234)

Appraisals
Affective Forecast
Thought-Based Decisions
Affective-Based decisions

Affective decision making is that in which

decisions are based on feelings or emotions.

make a decision because the choice feels right rather

than because they have made a detailed, systematic
evaluation of offerings
Affective Decision-Making (p 234)

1. Appraisal Theory: how we appraise the situation(chp2)

2. Affective Forecasting: what will you feel in the future

3. Imagery
Affective Decision-Making (p 234)
Appraisal Theory
Chp 2. how our emotions are determined by the way
that we think about or appraise the situation

Item out of stock, will it affect your next purchase?

Affective Decision-Making (p 234)
Affective Forecasting: what will you feel in the future
can influence the choices they make today.

Valance:

Intensity:

Duration: how long will you have these feelings?

Additional High-Effort Decisions

Decision Delay
Decision Making When Alternatives
Cannot Be Compared
Additional High-Effort Decisions
Decision delay
Decision too risky

Decision entails unpleasant task

Now: use coupons or discounts
Delay: Hype for iPhone or a new movie coming
Additional High-Effort Decisions

Decision when alternatives cannot be compared

E.g. plans for the weekend
Go to the movies, fly to Dubai, or stay with family?

Each alternative has different attributes, making comparisons

among them difficult.

Strategy:
Alternative-Based (top-down): Pros/cons of alternatives
independently then choose the one you like.
Compensatory/noncompensatory
Attribute-Based (bottom up): Create abstraction to make
comparisons easier. (Fun, make me more relaxed)
 What Affects High-Effort Decisions?

Consumer Characteristics
Expertise
Mood: how positively you judge a product.
Time pressure: short in time, you compare less attributes
Metacognitive experiences: how easy it is to recall and
process information.
Extremeness aversion: avoid risky choices
consumers normally try to avoid extreme choices
Its perceived as risky to go for the top or the bottom of
the product line for most consumers, and much safer
to choose something in the middle.